New Delhi based IT firm Newgen Software Technologies’ Initial Public Offer (IPO) to raise up to Rs 424 crore got subscribed by a total of 8 times as at the end of last day of bidding, backed by strong demand from institutional investors.
New Delhi based IT firm Newgen Software Technologies’ Initial Public Offer (IPO) to raise up to Rs 424 crore got subscribed by a total of 8 times as at the end of last day of bidding, backed by strong demand from institutional investors. Interestingly, the issue saw bids for a total of 9,71,21,638 shares as against issue size of 1,22,12,821 shares, implying subscription of nearly 8 times. QIBs bid for a total of 5.47 crore shares as against 35.06 lakh shares reserved for them, implying demand to the tune of nearly 16 times. Notably, the issue saw heavy demand from retail investors as they bid for a total of 2.85 crore shares as against 60.94 lakh shares reserved for them, implying a subscription of more than 4.5 times their reserved quota. The non-institutional investor quota too registered considerable demand a 5.51 times the total shares reserved for them.
The company had set a price band of Rs 240-245 for the issue, and looks to raise up to Rs 424 crore at the higher end of the band. The issue constitutes fresh issue worth of Rs 95 crore and offer for sale worth of Rs 330 crore (at upper band). The company will dilute 5.6 per cent of its post-offer paid-up equity share capital.
The lot size was fixed at 61 shares and in multiples of 61 shares thereafter. The shares will list on both BSE and NSE. The objectives of the IPO for the Company are to purchase and furnish office premises near Noida-Greater Noida Expressway, Uttar Pradesh and general corporate purposes.
“In terms of valuations, the pre-issue P/E works out to 274x its 1HFY2018 annualized earnings (at the upper end of the issue price band), which is higher compared to its peers like Intellect Design Arena (trading at PE 143x – 1HFY2018 annualized earnings). Further last four years historical financial records and 1HFY18 doesn’t provides confidence. Hence, we recommend Neutral rating on the issue,” noted Angel Broking.
Founded in 1992, Newgen Software Technologies Limited (NSTL) is a New Delhi based IT company and a provider of Business Process Management (BPM), Enterprise Content Management (ECM), Customer Communication Management (CCM), Document Management System (DMS), Workflow and Process Automation. The company has more than 450 active customers, with clients spread over 60 countries. The company sells its products to banks, insurance firms, BPOs and healthcare organizations. It has offices in the US, Canada, the United Kingdom, Singapore, and Dubai.